City Warned That Dealers May Not Sell Leaded Gas

January 03, 1985|By Ray Gibson.

AN OIL INDUSTRY official predicted Wednesday that Chicago stands to lose $4 million in revenue that city officials were expecting from a new 7-cent-a- gallon tax on leaded gasoline, because dealers will stop selling it.

Donald Woodrick, executive director of the Midwest Petroleum Marketers Association, in Rosemont, said Chicago service stations will switch to gasohol, which is made with alcohol obtained from agricultural products.

The new city tax on leaded gasoline sales went into effect Tuesday. It was enacted after Chicago health officials contended that leaded gas has endangered the lives of children. Tests at some playgrounds in Chicago last fall found lead concentrations at 33 times the maximum acceptable levels in soil.

Woodrick said Wednesday it appeared that city officials were unaware of some provisions in state law when they enacted the leaded gasoline tax. In particular, he cited a 1984 state law that gives dealers who sell gasohol a break on the state sales tax.

BECAUSE OF the state law, Woodrick and state officials said, the city stands to lose about 1 cent on every gallon of gasohol sold in Chicago, assuming that dealers switch to the product.

Woodrick said that in last-minute negotiations this week on the city`s budget, Chicago gasoline dealers urged a 1 percent increase in the sales tax on all gasoline as an alternative to the leaded-gas tax. Such an additional sales tax would have given the city $6 1/2 million, he said.

Woodrick said Chicago now has more taxes on a gallon of gasoline than any city in the U.S., with leaded-gasoline buyers paying about 40 cents a gallon in taxes.

Charles Sawyer, assistant director of the city Revenue Department, said he wasn`t sure how city budget officials determined that the leaded-gas tax would raise an additional $4 million. However, he said it appears likely that any additional taxes will drive customers away from the 897 licensed service stations in the city, to suburban and out-of-state gas stations.

Woodrick said state records indicate that there are more than 275,000 cars in Chicago that were built before 1975 and use leaded gasoline. He said as many as 200 stations have closed in Chicago in the last two years, partly as a result of high taxes, which favor suburban operators.